Chavez May Curb Oil Sales to U.S. in Response to Iran Sanctions

Venezuela said it may not be able to guarantee all future oil shipments to the U.S. after President Barack Obama imposed sanctions on South America’s biggest oil producer for doing business with Iran.

The U.S. yesterday imposed economic sanctions on state oil company Petroleos de Venezuela SA’s and six other foreign companies for working with Iran’s energy industry in ways that might bolster the country’s “illicit” nuclear program. PDVSA, as the company is known, delivered at least two cargos of a gasoline additive worth $50 million to Iran between December and March, the U.S. State Department said in a statement.

Venezuelan Oil Minister Rafael Ramirez told reporters yesterday that his government would provide an “adequate” response to the sanctions after analyzing their impact on PDVSA’s production and exports. President Hugo Chavez, an anti- American ally of Iranian President Mahmoud Ahmadinejad, said his country won’t back down in the face of U.S. “aggression.”

“The true impact of this new gringo aggression will be to strengthen the nationalist and patriotic morale of Venezuela,” Chavez said in a message posted on his Twitter account. The yield on 8.5 percent dollar-denominated PDVSA bonds due 2017 jumped 51 basis points, or 0.51 percentage point, to 15.74 percent yesterday, according to prices compiled by Bloomberg. The price fell 1.66 cents on the dollar to 71.33 cents.

Read more: http://www.bloomberg.com/news/2011-05-24/venezuela-to-study-how-sanctions-will-affect-oil-dispatches-1-.html

Heavy sour crude that is difficult to refine has only so many customers.

Bottom line is he's willing to take an economic hit to remain friends with Dinnerjacket, who might not be running anything soon, let alone the government of Iran.

that's the whole concept of fungible commodities. Any barrel of oil increases the overall international supply. Oil is bought and sold on a worldwide market, he can't direct it any more than we can keep our "own" oil here.

Just doesn't work that way.